U.S. stocks edge higher; solid earnings season continues
On Wednesday, Raymond (NSE:RYMD) James set a new price target for Viper Energy (NASDAQ:VNOM) shares, increasing it to $54.00 from the previous $52.00 while keeping an Outperform rating on the stock. This aligns with the broader analyst consensus, as shown by InvestingPro data, with price targets ranging from $47 to $61. The adjustment comes after the company’s first-quarter results and a significant expansion of its operations. Currently trading at a P/E ratio of 10.46, the stock appears attractively valued relative to its near-term earnings growth potential.
Viper Energy completed a drop-down transaction on May 1, which added approximately 22,847 net royalty acres to its Permian Basin holdings. This acquisition represents a 62% increase in the company’s net royalty acres, significantly enhancing its scale within the region. The company maintains strong financial health, with InvestingPro data showing a comfortable current ratio of 8.7 and moderate debt levels, positioning it well for this expansion.
For the second quarter of 2025, Raymond James anticipates Viper Energy’s total production to reach 75.5 thousand barrels of oil equivalent per day (Mboe/d), with oil volumes expected at 41.5 thousand barrels per day (Mbbl/d). These projections align with the company’s own guidance and current Street estimates.
The firm’s outlook for 2025 includes production of 76.4 Mboe/d and oil volumes of 42.3 Mbbl/d, figures that also match up with the guidance and consensus estimates. Looking further ahead, Viper Energy’s management forecasts a growth of 4 Mbbl/d in volume for 2026 from properties operated by Diamondback Energy (NASDAQ:FANG), along with the initial completions from a joint development program with FANG and Double Eagle in Reagan County.
Raymond James projects that Viper Energy will experience consistent quarter-over-quarter production growth throughout the next year, leading to a 2026 production estimate of 92.5 Mboe/d and oil volumes of 52.5 Mbbl/d. These numbers are again in line with what the Street anticipates.
The firm’s decision to reiterate its Outperform rating and raise the price target to $54 is based on the stronger commodity strip observed since their last assessment. This move reflects confidence in Viper Energy’s growth trajectory and operational advancements. According to InvestingPro, the company offers an attractive dividend yield of 6.15% and has demonstrated solid revenue growth with a 5-year CAGR of 22%. For deeper insights into Viper Energy’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Viper Energy reported better-than-expected earnings for the first quarter of 2025. The company achieved an earnings per share of $0.54, surpassing the forecasted $0.45, and recorded revenue of $245 million, exceeding the anticipated $234.79 million. Despite these strong financial results, Viper Energy’s dividend of $0.57 was slightly lower than expected, which may have impacted investor sentiment. Additionally, the company completed a significant dropdown transaction with Diamondback, which is expected to enhance its strategic positioning.
Fitch Ratings upgraded Viper Energy to investment grade, reflecting confidence in the company’s financial stability. Evercore ISI analysts resumed coverage of Viper Energy with an Outperform rating, setting a price target of $49.00. They noted the company’s ability to maintain its 2025 volume guidance despite reduced activity from its parent company. The completion of the Energy & Minerals Group transaction was highlighted as a factor in normalizing net revenue interests across asset bases.
Analysts emphasized Viper Energy’s focus on organic growth and its strategic shift in response to activity changes in the Permian Basin. The company’s market capitalization of approximately $12 billion was noted as free from structural issues, presenting an opportunity for evaluation. These developments indicate a positive outlook for Viper Energy, despite broader market volatility and challenges in the oil market.
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